Toward a

Base of the Pyramid Protocol™

Stuart Hart
Erik Simanis
Cornell University
The Paradox of Globalization

Development & Progress

Economic Growth
Production Expansion

Cultural Imperialism
Economic Inequality
Ecological Degradation
 The MNC: Traditional Customer Base

“Tip” of the
Income Pyramid
> $10,000/yr Cost structures, business
models, & research
methods based on a
“Western infrastructure”
The
“Base” of the “ToP”
Resource
Pyramid Customer
85% of Global Resources
 The BoP: Serving a Different Customer

Less than $1,500 per year

“Base” of the The

Income Pyramid “BoP”
Customer Will require
cost structures,
business models,
& research methods
“Tip” of the
15% of
resources
based on a different
Resource infrastructure.
Pyramid
 The BoP presents…

NOT a marketing problem

The “Sachet Mindset”
• Food & Nutrition and FMCPs

NOT a technology problem

The “Killer Ap Mindset”
• Water Purification, Distributed Energy and ICTs

but a Business Model challenge

 You can’t solve a problem
using the same mindset that
created it.

How do you “imagine,” pilot, and scale

business models for a BoP infrastructure if
your past & current business is ToP?
Co-Creating the Business

Engaging the BoP differently…

Customers Partners

Clients Colleagues

To serve the BoP, MNCs will need to

develop a new capability…
 Native Capability
The ability to…
• Engage with marginalized groups and
communities in mutual business partnership
• Build long-term relationships of trust and
understanding with BoP communities
• Creatively marry MNC capabilities and
technologies with those of BoP communities
through a process of co-creation
• Evolve the business model from the ground up
BoP Protocol™: A Collaborative Venture
Sponsored By:
Cornell University
University of Michigan
William Davidson Institute
The World Resources Institute
The Johnson Foundation

Generous Support From:

DuPont
Hewlett Packard
SC Johnson
Tetra Pak

www.johnson.cornell.edu/sge
www.bop-protocol.org
 BOP Protocol Project Staff
• Core Staff
– Stuart Hart, Cornell University
– Erik Simanis, Cornell University
– Gordon Enk, Partners in Strategic Change
– Mike Gordon, University of Michigan
– Mark Milstein, WRI/Cornell University
– Ted London, William Davidson Institute
– Duncan Duke, Cornell University
 BoP Protocol™: Project Overview
2006 and Beyond
2003-2004

Executive Protocol
October 2004 October 2005 Education Refinement

Research
Workshop I Workshop II Full Scale
On
Development Designing Refining Implementation
Methodologies The The with Candidate
& Protocol Protocol Companies
BoP Strategies Dupont/Solae: India

Protocol Protocol
• Participatory Rural Version 1.0 Version 2.0
Appraisal (PRA) & Field Guide
• Rapid Assessment Pilot Test:
Process (RAP) SC Johnson
• Quick Ethnography Kenya
• Empathy-based
Design
 The BoP Protocol™: Big Picture
Co-Generated Co-Developed
Business Concept Business Model

“Opening Up” “Building the

Launch a non-business
specific immersion guided by
two-way dialogue and humility
Ecosystem”
Bring together a diverse network
of partners that incubate the
business ideas and bridge
capability gaps

“Enterprise Creation”
Fine-tune and grow the business
by conducting small-scale
experiments and scale-outing to
new communities

Locally-Embedded
Global Business
Network
 BoP Protocol: MNC Initiatives
1) Pilot Test: SC Johnson Kenya Initiative
Phase I: “Opening Up”
March – August 2005

Phase II: “Building the Ecosystem”

September 2005 – June 2006

Phase III: “Enterprise Creation”

July 2006 – ???

2) Full Scale: Dupont/Solae India Initiative

Phase I: “Opening Up”
January – August 2005
 Pre-Field: Site Selection

NYOTA, Nakuru District Warangal District, AP

Kenya India

Indiramma Nagar,
KIBERA, Nairobi Hyderabad
 Pre-Field: Local Partner Selection
Discovery-Based Networking Identifying deeply
embedded and attuned
community partners
 BoP Protocol: Phase I Processes

Business
Concept Phase I:
Co-Generation
Opening Up

Non-Business
Specific
Immersion Formation
Collective
of Project
Entrepreneurship
Community
Development

Business
Co-Creation

Small-Scale Building
Enterprise Pilot Shared Building the
Testing Commitment
Creation Business New Business Ecosystem
Scale-Out Capability Model
& Embedding Development Development
 Opening Up
Non Business Specific Immersion

Building trust by
practicing humility and
seeing positive capacity

Forming a committed &

representative group
Formation of Project Community
 Opening Up
Workshop Topics
• Building successful partnership
• Creating unique customer value
• Rethinking resources & capabilities
• Articulating a business concept
• Imagining new businesses

Learning how to build a

business together Generating ‘embedded
ideas” that build off of
Collective Entrepreneurship local resources & meet
Development local needs/wants

Business Concept
Co-Generation
SCJ Business Co-Generation: Kibera

“Community Cleaning Service”

Diversify & professionalize Taka ni
Pato youth groups’ trash collection &
recycling business through a direct-to-
home cleaning service that bundles
SCJ products
 Re-Imagining SCJ’s Business Model

• Redefine SCJ’s products away from narrow brands to broad

suits of service (“Environmental Health and Cleanliness” vs
Raid)
• Engage “under-employed” youth in a micro-enterprise model
(versus central distribution)
• Leverage youth group’s trash collection networks as a direct-
to-home distribution channel (instead of bike distribution to
dukas)
• Servicize SCJ-K’s product line (instead of smaller packages)
• Leverage youth group’s social outreach skills (e.g., theatre) to
communicate the service’s social benefits (versus radio or TV
advertising)
 BoP Protocol: Phase II Processes
Opening
Up
Business
Concept
Co-Generation

Non-Business Phase II:

Specific
Immersion Formation
Building the
Collective
Entrepreneurship of Project Ecosystem
Development Community

Business
Co-Creation
Small-Scale Building
Pilot Shared
Enterprise
Testing Commitment
Creation Business New Business
Scale-Out Capabilities Model
& Embedding Development Development
 Building the Ecosystem
Formation of
Project Community

Building Shared
Commitment

Extending networks &

deepening relationships
within community
 Building the Ecosystem

New Capabilities
Development

Business Model
Development

Evolving the
value
proposition
from the
ground up
 BoP Protocol: Phase III Processes

Opening Up
Business
Concept
Co-Generation

Non-Business
Specific
Immersion Formation
Collective of Project
Phase III: Entrepreneurship Community
Development
Enterprise
Business
Creation Co-Creation
Building Building the
Small-Scale
Pilot Shared Ecosystem
Testing Commitment
Business New Business
Scale-Out Capabilities Model
& Embedding Development Development
 Enterprise Creation

Small-Scale Pilot
Testing

Fail Small,
Learn Big
 Enterprise Creation

New Capabilities
Development

Building a platform
Collective
Entrepreneurship Development for growth & expansion
Enterprise Creation

Develop
capability

Re-embed
 Conclusion
• Very difficult to “outsource” the BoP
Protocol process
– Development of radical new business models
and the generation of “competitive
imagination” requires corporate employees
and representatives to be on the core
immersion team
– BoP Protocol represents a new corporate
capability
 Question
• How would you put together a “BoP
Protocol Immersion Team” in your
organization?
– What specific backgrounds and personal
characteristics should individuals have?
– What skills and capabilities would be most
important?
– How would you go about preparing the team
for the challenge?
For BoP Protocol Updates and
Announcements…

www.bop-protocol.org
 Who Will Thrive in the BoP Setting?
• Personal passion and commitment to addressing issues
of poverty and sustainable development through
business
• Past experience living in or working with poor
communities
• Past experience leading or participating in an
entrepreneurial venture
• Experience or knowledge in finance, accounting,
operations, and marketing
• Ability to work under conditions of high uncertainty and
ambiguity
• Ability to engage and learn as equals with people from
varying educational and experiential backgrounds